Can China’s export machine run without the West?
China’s exports are still going strong. That has created tension with the West and led to a new wave of tariffs on its eclectic vehicles. But it is also reshaping global trade.
The question for Beijing is whether a pivot to the developing world will be enough to keep its export machine humming. China’s latest trade data released last week said a lot. Exports in May increased 7.6% from a year earlier in dollar terms, while imports rose 1.8%.
The implosion of China’s housing market has dragged down domestic demand, so Beijing has revved up its export engine to drive growth. That has, however, caused much unease in Western capitals. The Biden administration has announced new tariffs of 100% on Chinese electric vehicles and a 25% tariff on Chinese EV batteries and parts, which will come into effect in the coming months.
On Wednesday, the European Commission unveiled new duties on Chinese EVs ranging from 17.4% to 38.1% following an antisubsidy investigation. In a statement, it said that it found unfair subsidies throughout the entire Chinese EV value chain and that “the influx of subsidized Chinese imports at artificially low prices therefore presents a threat of clearly foreseeable and imminent injury to EU industry." Some of the recent strong growth could be due to manufacturers trying to front-run potential trade restrictions. China’s exports to the U.S., for example, rose 3.6% on-year in May, contrary to the trend of the past couple of years.
But overall, China has been selling less to the West and more to Southeast Asia and Latin America. Exports to Southeast Asia in the first five months of this year rose 12% from the same period two years earlier. Over the same time, China exported 17% less to the U.S.
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